The Renewable Energy Resources Support Mechanism (YEKDEM) is a financial and legal framework established by Turkey to promote renewable energy investments. This mechanism ensures that electricity generated from renewable energy sources is purchased by the state or authorized entities at fixed, incentive-based tariffs, providing financial security to investors and reducing reliance on fossil fuels.
In this article, we will explore the legal framework of YEKDEM, its objectives, eligibility criteria, tariff structures, application procedures, benefits, and common legal challenges.
1. Legal Framework of YEKDEM
YEKDEM was established under the following laws and regulations:
- Law No. 5346 on the Utilization of Renewable Energy Resources for the Purpose of Generating Electrical Energy (Renewable Energy Law).
- Electricity Market Law No. 6446.
- YEKDEM Regulation issued by the Energy Market Regulatory Authority (EPDK).
- Environmental Law No. 2872 and related secondary legislation regarding environmental compliance.
The system was introduced to encourage renewable energy investments by guaranteeing electricity purchases at predetermined prices for a specific period.
2. Objectives of YEKDEM
The main objectives of YEKDEM are:
- To increase the share of renewable energy in Turkey’s electricity generation portfolio.
- To provide financial incentives for investors and reduce market risks.
- To support domestic manufacturing of renewable energy equipment by offering additional bonuses.
- To promote environmentally sustainable energy generation and reduce greenhouse gas emissions.
3. Eligible Energy Sources
YEKDEM applies to electricity generated from the following renewable energy sources:
- Solar (Photovoltaic and CSP).
- Wind.
- Hydropower (Run-of-river and reservoir-based).
- Biomass (including landfill gas and agricultural waste).
- Geothermal energy.
4. Tariff Structure under YEKDEM
The YEKDEM mechanism provides feed-in tariffs—fixed prices at which renewable energy producers can sell electricity to the grid.
Key features include:
- Tariffs are USD-based (converted to TL for payments) and guaranteed for 10 years.
- Additional domestic component bonuses are provided for plants using equipment manufactured in Turkey (e.g., panels, turbines, inverters).
- Example tariff ranges (subject to updates):
- Solar: ~13.3 USD cents/kWh.
- Wind: ~7.3 USD cents/kWh.
- Geothermal: ~10.5 USD cents/kWh.
- Biomass: ~13.3 USD cents/kWh.
- Hydropower: ~7.3 USD cents/kWh.
5. Application Process for YEKDEM
5.1. Licensing Requirements
- Investors must have a generation license issued by EPDK (for plants over 1 MW capacity).
- Facilities under 1 MW may operate under unlicensed generation rules but can still benefit from simplified YEKDEM procedures.
5.2. Registration Timeline
- Applications must be made before the start of the following calendar year.
- EPDK reviews and approves applications based on technical compliance and eligibility.
5.3. Required Documents
- Generation license and project details.
- Technical documents on installed capacity and energy source.
- Proof of domestic component usage (if applicable).
- Environmental permits and grid connection agreements.
6. Benefits of YEKDEM for Investors
- Revenue Stability: Fixed-price purchase guarantees reduce market price risks.
- Investment Attraction: Improves bankability of renewable energy projects, making them attractive for financing.
- Support for Domestic Industry: Additional bonuses encourage the development of local manufacturing for renewable energy components.
- Environmental Impact: Reduces carbon emissions and promotes clean energy.
7. YEKDEM and Domestic Component Incentives
Investors using domestically manufactured equipment (e.g., wind turbine blades, solar panels, hydropower turbines) can receive additional tariff bonuses for 5 years.
For example:
- A solar plant with domestic panels and inverters may receive an additional 1.5-2.0 USD cents/kWh on top of the base tariff.
8. YEKDEM’s Role in Turkey’s Energy Policy
- YEKDEM has been instrumental in increasing Turkey’s renewable energy capacity to over 55,000 MW as of 2024.
- It has attracted billions of dollars in foreign and domestic investments.
- The program is aligned with Turkey’s National Renewable Energy Action Plan and the Paris Climate Agreement.
9. Legal and Regulatory Challenges
While YEKDEM offers major benefits, some challenges include:
- Tariff Reductions: Over time, tariffs have been revised downward, affecting profitability.
- Grid Capacity Constraints: Some renewable projects face delays due to limited transmission capacity.
- Complex Licensing: The process for obtaining generation licenses and grid connection can be time-consuming.
10. Dispute Resolution under YEKDEM
Legal disputes may arise concerning:
- Delayed grid connections.
- Tariff adjustments or disputes with EPDK.
- Domestic component bonus verification.
Disputes are typically resolved via:
- Administrative appeals to EPDK.
- Commercial arbitration (for private contract disputes).
- Administrative courts for regulatory decisions.
11. Future of YEKDEM
Turkey is considering a transition to auction-based mechanisms (similar to EU models), where renewable energy projects bid for fixed tariffs.
However, YEKDEM remains active for existing projects, and new incentive structures are expected for hybrid and offshore renewable projects.
12. Role of Legal Counsel
Energy law specialists can:
- Guide investors through YEKDEM registration.
- Ensure compliance with EPDK licensing and environmental regulations.
- Draft contracts and manage disputes related to feed-in tariffs.
- Assist in obtaining domestic component bonuses.
13. Conclusion
YEKDEM (Renewable Energy Resources Support Mechanism) is one of the most important incentives for renewable energy investments in Turkey. By guaranteeing fixed feed-in tariffs and offering domestic component bonuses, it reduces investment risks and supports the country’s shift towards sustainable energy.
Key Takeaways:
- YEKDEM is governed by Law No. 5346 and EPDK regulations.
- Eligible renewable energy sources include solar, wind, biomass, hydro, and geothermal.
- Investors benefit from a 10-year guaranteed purchase price and additional incentives for domestic equipment.
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